Sunday, June 27, 2010

New Bill to define independent directors' role, says Khurshid

S Kalyana Ramanathan / London June 28, 2010

The role of independent directors (IDs) on the board of Indian companies will be clarified in the new Companies Bill and their responsibilities will be made finite in terms of what they are answerable for, said Union Corporate Affairs Minister Salman Khurshid.

Post ‘Satyamgate’, IDs across various companies have been frightened to continue in their roles. Companies have witnessed several resignations by IDs due to lack of legal clarity on their role in the event of a scandal for which they could not be directly responsible.

While IDs would be subject to the general laws of the land, their role in the company would be more clearly defined. The new Companies Act would specifically say what they need to look out for as a member of the board. These directors, however, would still be subject to overriding principles that “ignorance of law cannot be a excuse for violating the law”.

However, more stringent conditions for qualifying as an ID is not likely to be brought into the new bill. Khurshid said there was already a big shortage of IDs for companies in India.

Khurshid, who was in London on his way from Ireland to Delhi, said the parliamentary report on the new Companies Bill was expected to be ready by the monsoon session. He was hoping to table the bill in the Lok Sabha by the winter session. The bill should be passed as a law no later than Budget 2011 (February), Khurshid said. The minister said this at an informal gathering of Indian journalists in London on Saturday.

Khurshid was in Ireland to represent the Indian government at the 25th anniversary of the 1985 bombing of Air India’s flight, Emperor Kanishka, that killed 329 people. The flight crashed into the Atlantic Ocean over Irish airspace when it was blown up by suspected Sikh terrorists. Khurshid said he was not meeting any members of the new Conservative-LibDem government in the UK.

Irish offer for AIKhurshid said the government of Ireland had offered a proposal for Air India to shift its European hub from Frankfurt to Dublin. As part of this offer, the Irish government is willing to provide a Schengen and Irish transit visa for passengers to spend up to two days in the country. Khurshid said AI was considering the proposal’s commercial viability, noting his own ministry would have no role in the final decision.